CGS Administrators, LLC, Paid Unallowable Lower Limb Prosthetics Claims

CGS Administrators, LLC (CGS) (operating in Tennessee), paid $6 million for 4,260 lines of service for lower limb prostheses in 2010 and 2011 that did not meet local coverage determination (LCD) requirements. At the time that CGS paid these lines of service, it did not have edits in place to evaluate whether they met all the LCD requirements. In 2012, the Centers for Medicare & Medicaid Services (CMS) issued a technical direction letter that instructed CGS and the other Durable Medical Equipment Medicare Administrative Contractors to put in place claim edits for all requirements set forth in the lower limb prosthetics LCD.

We recommended that CGS (1) recover $6 million in identified overpayments for lines of service for lower limb prostheses that did not meet LCD requirements in 2010 and 2011 and (2) monitor the edits it developed in response to CMS's March 2012 technical direction letter to ensure that the edits are functioning correctly. CGS concurred with our recommendations and described corrective actions that it had taken or planned to take.